Is there any way out of this awful cell phone contract?

While it is seldom the driving reason to file a case, consumers should be aware that the bankruptcy code offers them a way out of onerous multi-year cellular telephone contracts.

Whenever a bankruptcy case is filed under either Chapter 7 or 13, the debtor has the option of listing “executory contracts” on schedule G of the petition. In plain language, these are leases and other contracts with time remaining on them. Cell phone contracts fit the bill perfectly.

In a chapter 7 case the contract will be “rejected” (that is, terminated) after 60 days unless your case trustee says otherwise, and the chances that he wants to pay your cell phone bill are just about absolute zero.

In a chapter 13 case, the debtors can reject the cell phone contract themselves at the time they file the case.

In either situation, the debtors will avoid having to pay early termination fees, or any other outrageous fees the carrier has cooked up. You can continue to use your phone if you are willing to pay the ongoing rates, but if you want to get rid of the phone service as well as the account, that can be arranged as well.


By Doug Beaton

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